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Hidden Assets

Perhaps the most under-utilized assets in most companies are the ideas in their employees’ heads. As many companies strive to be more innovative, jump-start their stagnant growth, and improve employee engagement, they overlook one fundamental truth:

Frontline employees are more likely than senior executives to come up with game-changing innovations.

This is because frontline employees are more likely to be working with customers and working on the products that customers use. Executives are more likely to be spending most of their days in meetings with other executives. The every-day experiences of frontline employees provide them the insights on unsolved customer problems and ideas for better solutions.

The evidence of these “hidden assets” is most apparent when employees leave a company to launch their own startup to turn their ideas into products. In many of these instances, these startup founders have stated that they would have been quite happy to have built the product for their former company but there was no support for the idea.

But hidden assets can exist in less obvious forms. For example, an employee may have an idea for a killer new product feature which the company fails to act upon until a competitor implements it. Another common example is where employees foretell the fatal issues that a project will face long before that project is canceled.

Here are just a few examples of huge missed opportunities where companies didn’t take advantage of their hidden assets:

Hewlett-Packard and the Apple I: Steve Wozniak begged HP five times to make the Apple I. They turned him down five times. Fortunately, Steve Jobs saw the potential of the personal computer and together they created Apple Computers. Here’s a fun data point: In March 2016, Apple’s market cap hovers just below $600B while the combined valuation of Hewlett Packard Enterprise and Hewlett Packard Inc is around $50B.

Edison Electric and Alternating Current:A tale of pig-headedness and ego … Nikola Tesla, an employee of Edison’s, invented the alternating current (AC) system for transmitting large amount of electrical power. Edison fought it, claiming the approach to be inferior to direct current (DC) power. Tesla quit, founded his own research company, and sold the AC power systems invention to George Westinghouse. AC power enabled the spread of electric power grids across the world and has earned Westinghouse and other AC system licensees hundreds of billions of dollars in revenue.

Real Networks and the iPod: Tony Fadell took his idea of a hard-drive based digital music player to Apple after clashing with the CEO of Real Networks. The iPod would eventually lead to Apple’s resurgence.

PayPal and Youtube: Founders Chad Hurley, Steve Chen, and Jawed Karim left PayPal to start Youtube when they realized how difficult it was to share videos online. Google acquired Youtube for $1.65B in stock in 2006.

Even companies that have innovation programs and claim to encourage intrapreneurship can still miss out on their hidden assets. While it may not be possible to curb each instance of entrepreneurial ambition, could companies do more to take advantage of their hidden assets? We believe a well designed and implemented grassroots innovation program can help accomplish exactly that.

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Perhaps the most underutilized assets in most companies are the ideas in their employees’ heads.

It makes sense that the people spending most of their day working on products or with customers are bombarded with insights on new and better ways to serve those customers. But in too many companies, employees are not empowered to do anything with their ideas. Instead, decisions on what ideas to explore are made by senior leaders. But these senior leaders don’t have the same proximity to insights because they spend most of their working day meeting with other senior leaders. We call this the Insight-Decision Divide.

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